The index reached 21,293.88 early on Friday, surpassing its previous high of 21,206 set during the stock market boom of 2008, before closing at 21,196.81. 

 

The rise marks a remarkable¹ turn around from two months earlier, when foreign investors³ were pulling out money from the country amid worries over growth. 

 

However, some analysts⁴ doubted whether the current rally was sustainable. 

 

"I am not too pleased with the way fundamentals are shaping up," said Phani Sekhar, a fund manager of portfolio⁵ management services at Angel Broking.

 

He added that the rally was being driven by only a handful of stocks "which are hopelessly expensive despite fundamentals". 

 

"The liquidity⁶ rush is making people accumulate stocks. If fundamentals don't improve or liquidity tapers⁷（逐渐缩减）, then this rally won't have many legs," he said.

 

 

Investor² confidence has also been boosted after the country's new central bank chief, Raghuram Rajan, took charge in September and promised tough action to boost growth.

 

Mr Rajan has unveiled a series of measures aimed at propping⁸ up the currency and liberalising the country's banking⁹ sector¹⁰.

 

Since then, markets have risen strongly and the rupee has strengthened - after having dipped nearly 28% against the US dollar between May and August.

 

It has now recouped some of those losses, gaining 10% against the US dollar since the start of September. 

 

The stock index has now risen nearly 19% since hitting this year's lowest level in August, in what many have dubbed¹¹ as the Rajan rally.

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